What Does It Take to Become a CFO?

Finance officers and recruiters offer some advice on how to increase your chances of landing the job.

TO INCREASE THE LIKELIHOOD OF BECOMING A
CFO, you need a broad range of skills
beyond knowing the ABCs of accounting. You must
be a business strategist, think like someone on
the board of directors and be familiar with
technology. Don’t ignore the operations side of
the business either.

CPAs ARE PARTICULARLY WELL-SUITED
to becoming CFOs and working as the
CEO’s right hand. Because of their discipline
and organization and their ability to present
financial information appropriately and with
integrity, accounting professionals make
excellent CFO candidates.

CFOs NEED CORPORATE EXPERIENCE
in either the controller or treasury
functions. It’s okay to move around companies to
gain experience. It’s critical to keep up with
continuing professional education, especially in
today’s regulatory environment.

POSITIONING YOURSELF AS A TEAM- AND
CONSENSUS- builder will encourage
people to trust your judgment. The CFO applicant
must know how to deal with all the business
departments, must understand risks and provide
options for mitigating them.

DON’T ASSUME THE CEO KNOWS you
want to be CFO. Make yourself known. The CEO
wants someone of impeccable integrity and
loyalty. Network, develop contacts on the board
and with your auditors.

Carol Lippert Gray is a freelance
writer from Morristown, New Jersey. Her e-mail
address is clippy331@aol.com
.

ant to be a chief financial officer? Business
experts and CFOs themselves say your first priority is to
become a business strategist. You have to move from an
accounting focus to see the borders of the big picture—and
beyond. You have to understand all aspects of your business,
from the sales goals to the marketing plan to your company’s
position in the marketplace through to the strategic plan.
You have to be familiar with distribution channels, public
relations and all other functional silos. You have to
understand the latest technology and be able to share your
IT savvy with your colleagues. In other words, “You can’t
rely on just knowing the ABCs of accounting,” explains Diane
Albergo, manager of member career services at the Financial
Executives Institute (FEI), a membership organization for
CFOs and senior financial executives in Morristown, New
Jersey. “You need a strong business sense.”

What CFOs
Earn

Source: “Climbing
the Compensation Chart” by Eric Krell in the “Just
Compensation” supplement to Business Finance
(Nov.00), www.businessfinancemag.com
. Reprinted with permission.

But since CFOs are made,
not born, how can you increase your likelihood of becoming
one—and thus being the right hand of the CEO? In addition to
having excellent “soft” or “people” skills, you need
extensive technical knowledge. In today’s business
environment, however, the experts say there’s so much
overlap between hard and soft skills it’s sometimes
difficult to distinguish between them.

Perhaps
that’s why Laurence Stybel, of Boston-based Stybel Peabody
& Associates, Inc., an executive search firm, recommends
that you begin your quest for CFO-hood by changing your own
thought processes. “Start thinking like a member of the
board of directors,” he advises. “You’ve proved you can
think like an accountant. Most CEOs are obsessed by what
their boards are thinking. Come across as someone who knows
what the board wants and the CEO will think of you as a
confidant.”

TAKE YOURSELF TO THE TOP

If you’re actively
seeking a CFO position, Stybel offers some techniques that
can help. “Go to Web sites such as monster.com,
careerpath.com and fei.org,” he suggests. “Look at the ads
for CFOs and check the clichs du jour. The marketplace is
telling you this minute what it wants. ‘Multitasking’ is
very in these days, but ‘being a business partner’ is so
1997.”

His other pointers:

“Sometimes, to position yourself for the next level,
you may have to do things that are counterintuitive.
Look for what the market wants rather than what you
want.”

“Understand your best source of opportunity will
come from outside your company. Employees at some large
companies can be recognized internally. But smaller
companies are more thinly staffed, without much bench
strength. Sometimes being at a small company makes it
unlikely a controller can be recognized as anything but
a controller.”

“Don’t get dazzled by the title. Focus on the job
content and reporting relationship. A lot of people with
the title vice-president of finance really are
controllers and may not be CFO material. They may lack
treasury experience, for example.”

Jobseekers must think like marketers and step
outside their customary roles. “A job search involves
differentiation. The whole idea is to stand out from the
crowd.” That may be hard for CPAs, however. “It’s the
equivalent of asking you to write your name with the
wrong hand and violates a lifetime of learning and
habits that have made you successful.”

“Network. Develop contacts, especially partners in
CPA and law firms and people on boards of directors. Go
out of your way to meet those people. Change your
personal focus from inward to outward.”

There’s no clear-cut path to the CFO suite and no
one-size-fits-all job description. The good news, according
to Betsey Nelson, CFO of San Francisco-based Macromedia,
which helps Web developers create state-of-the-art Web
sites, is that accounting professionals are particularly
well-suited to the position. “Because of their discipline
and organization, their ability to present financial
information appropriately and with integrity makes their
information superb.” Nelson calls herself “an economist who
rose through the financial planning ranks.” She is
responsible for all administrative functions, including
accounting and finance, treasury, tax, human resources, real
estate, legal, mergers and acquisitions and investor
relations.

Before joining Macromedia, Nelson spent
eight years at Hewlett Packard, where she held a variety of
positions in both finance and corporate development. She was
involved in numerous acquisitions, equity investments,
divestitures and joint ventures both domestically and
internationally. Before that, she was a consultant with
Robert Nathan Associates, an international economic
consulting firm based in Washington, D.C.

Nelson
holds an MBA in finance with distinction from the Wharton
School at the University of Pennsylvania and a Bachelor of
Science in foreign service from Georgetown University. Her
advice for getting ahead includes maintaining a positive
attitude and willingness to get involved. “The more you put
yourself forward, the more people will put on you.” And, she
adds, “It’s always good to ask questions.”

BREADTH OF VISION

Successful finance execs
seem to agree that technology skills and breadth of vision
are hallmarks of the CFO position. A viable candidate “has
to be broad in many areas; being a CPA is only one of them,”
says John Meinert, a CFO who rose to chairman of apparel
maker Hartmarx Corp. Meinert, a past president of the
Illinois CPA Society and an AICPA vice-president, now is a
principal with J.H. Chapman Group, investment bankers in
Rosemont, Illinois. “Two other factors have a terribly
important impact on this objective: the computerization of
information and the participation of the CFO in all forms of
operations,” he says. In other words, explains Meinert, you
must understand “the technology behind the way goods and
services are marketed” and “every kind of asset, including
intangibles, property leases, negotiations, mergers and
acquisitions and pensions and benefits.”

Paul
McDonald, executive director of management resources at
Robert Half International in Menlo Park, California, seconds
the importance of technology savvy. “Many CFOs have the
information technology department reporting to them,” he
says. “You need a solid understanding of enterprise resource
planning and e-business initiatives. You need to keep pace
with emerging technologies and Web-based applications,
especially those that coordinate front- and back-office
operations.” To do so, he suggests, “Study up on what’s
needed and what’s going on within your corporation. If you
are asked to sit on a financial systems conversion
committee, take advantage of the offer. Make yourself
visible through verbal and written communication to the
committee.” And, he adds, don’t neglect your continuing
professional education, through university classes or
professional seminars. In fact, FEI’s Albergo says, many an
accountant who hopes to become a CFO has returned to school
to pursue an MBA.

According to McDonald,
industry-specific skills are less important than a
well-rounded total skill set. “If you have strong
decision-making skills and an MBA or CPA, you’ll have an
advantage over someone with industry-specific skills who may
be lacking in the technical or functional arena.”

Meinert adds, “You can gain a lot of experience by moving
between companies.” No matter the industry, however,
corporate experience is critical. “You need to come from the
controller side or the treasury side,” Albergo says. “CFOs
come up one way or the other. It’s harder if you’re just
coming out of a public accounting background.”

Still, the route to the CFO suite can be a catch-22
process, according to Ruth Wallace, CFO at Patrion, a
Web-based start-up for long-term care providers, residents
and families in Louisville, Kentucky. A CPA who spent 10
years with KPMG, Wallace previously was CFO of Community
Physicians Network and Centennial Resources Inc.
“Organizations typically want to hire a CFO who’s been a
CFO,” she says.

Preparing for the First Step

Here are some suggestions for the job candidate
going off to the first round interview for a CFO
position.

Do your research. Don’t go
in unprepared. Minimum requirements for a public
company include a review of the company’s 10Ks and
those of its key competitors. For a private
company, review the Dun & Bradstreet Credit
Reports for the company and its key competitors.
And it’s always a good idea to speak with current
and former employees of your potential employer.

Identify the company’s needs.
Approach the first interview like a
consultant. Ask the interviewer about the
organization, and use the job description as a
platform to find out the needs and constraints.
Here are some questions to ask during the first
interview that will make the employer want to see
you again:

Why is this position
open?

If you were to list your needs in the next 12
months, what would they be?

What internal or external problems do you
perceive in this position?

What do you want to achieve in the next 12
months?

What do you want to preserve in the next 12
months?

What do you want to avoid in the next 12
months?

Structure the right analogy.
Do you think of a job interview in
these terms?

A job interview is like
an audition for a play. You try your best and
then wait for the producer’s decision.

A job interview is like playing a tennis
match.

You volley back the
questions, and then wait for the return.

Of course, these analogies are
oversimplifications. Viewing the job search as an
audition is too passive, and seeing it as a tennis
match implies an adversarial relationship.
Instead, try this analogy:

A job
interview is a way to put together a consulting
proposal for a long-term, expensive project.

Keep in mind you don’t have to be
brilliant in the first interview. Your candidacy
can be kept alive with the proper post-interview
tactics. Do not merely send bland “thank you”
letters. Instead, try to capitalize on what you
learned during the interview by sending in a draft
proposal that positions you as an executive
problem-solver.

The bottom line is
convincing the company it is not making a mistake
in hiring you.

What kinds of experience
should you highlight on your resume? The short answer is
“varied.”

“You need an understanding of the
financial markets, venture capital, Wall Street and
leveraged balance sheets,” Wallace says. “Work with your
company’s external auditors.” In other words, stay in touch
with your outside auditors for more than just the annual
audit. She suggests candidates develop strong technical
accounting knowledge, especially in today’s regulatory
environment. “Controllers may want to go back to public
accounting,” she says.

If you’re a controller,
McDonald adds, your experience should be as diverse as
possible, including budgeting, planning and up-to-date
financial systems knowledge.

Familiarity with
reengineering is also important. A CFO should be a strong
leader who can let go of weak staff members, “demand
excellence, lead change and think out of the box to shake up
the organization,” Wallace says. Companies seek CFOs who
have demonstrated that they have technical skills. “Raise
and manage equity and debt. Develop relationships and
influence people. Be innovative and decisive.”

According to McDonald, “Helping to take a company public
is always outstanding experience in marketing yourself, as
is reengineering experience.” If a candidate has been
involved in a merger, “You know what change is all about.
You are adaptable.” Other experience that strengthens your
track record, he thinks, includes taxation, budgeting and
treasury functions. In addition, he says CFOs “need a broad
understanding of legal matters and have to know when to
refer to inside or outside counsel.”

Having a mentor
doesn’t hurt, either. “My first opportunity was provided by
my mentor and supervisor in public accounting,” Wallace
says. Today, in fact, the trend toward mentoring is so
strong, McDonald, Nelson and Albergo say, many corporations
are starting internal mentoring programs for their finance
and accounting staffs. It’s wise for CFOs to mentor their
own employees, too. “I’m always looking for ways to involve
my accounting people more deeply in the business,” Nelson
says.

But you have to be a self-starter. “Study up
on what’s needed and going on within your corporation,”
notes McDonald. “Typically, you’re aware of what’s going on
in your industry by studying the competition and
benchmarking your organization.”

ASK FOR WHAT YOU WANT

If you feel you’re
lacking expertise in a particular area, McDonald says, go
ask for it. You may be able to get involved in a project
through a simple request to your boss. McDonald also
encourages stepping away from your desk and into group
projects. “Build credibility,” he says. “Volunteer. People
will learn to trust your judgment. You’ll become known
across cross-functional lines and will be seen as a team-
and consensus-builder.”

Meinert recalls that in his
career, every time an opportunity—such as work in foreign
operations or licensing—came up, he took advantage of it. He
came to Hartmarx when he was 22 and was named CFO in his
late 30s. He was asked to travel to Europe and negotiate
contracts for licenses and sublicenses for apparel. By 1973,
when he was CFO, Meinert went to Japan. “Working back and
forth with various companies and helping them find ways to
license and sublicense names—and finding the manufacturers
to do it—is an important way to learn to deal with people,”
he explains.

Tim Adelman, who is CFO of
InsuranceNoodle.com, a Chicago-based online insurance
solution provider for small businesses, and former CFO of
Aon Enterprise (another small business insurance provider),
stresses the importance of additional abilities:
multitasking; dealing with various business departments;
handling human resources; and risk-management skills.
Working at a small company, Adelman says he wears many hats
and is responsible for “everything including the kitchen
sink.” But, he says, “I am having the most fun I have had in
16 years.”

Before joining InsuranceNoodle.com,
Adelman, a CPA, was vice-president of financial consulting
at Marsh USA, the brokerage unit of Marsh & McLennan.
From 1989 to 1998, he held various positions at Aon
Enterprise, from accounting manager to CFO.

“You
have to prove yourself to your company’s internal customers
(from the mailroom to the CEO to the advisory board), to its
external customers and to its shareholders,” he says. “Be
part of the business process to drive value and help execute
the business plan rather than being just a cost center. The
job of the controller and CFO is to remove obstacles and
break barriers so others can do their jobs. You must be able
to deliver and execute within a team environment. ‘No’ is
not an acceptable response within the organization.”

Having done all that, though, it’s not always easy to
achieve internal recognition. You may think you’re ready to
be CFO but the decision makers may not. “It’s like your
father never believing you know how to drive a car,” Meinert
says. “You’ve got to show that you are capable. Put good
teams together. Put the brightest people under you who are
pushing for your job. They’ll push you up, not out.
Self-confidence is persuasive to your superiors.”

“You may have to get experience outside your company,”
McDonald says. “Call a business incubator or the local
chapter of the Small Business Administration and volunteer
for a local corps of executives. Or spread the word that
you’ll help a small company get a loan or write a proposal.”

Still want to be a CFO? Remember, cautions Meinert,
“You can’t be just a numbers person. You have to be an
operations person.” But why stop at CFO? “With enough
breadth, you can become chairman of the company,” he adds.
“If you have what it takes to be CFO, you have what it takes
to be CEO and even chairman.”

You Have to Know
the Big Picture

A lthough IT expertise is a
crucial skill for aspiring CFOs, many experts
stress that the knowledge base doesn’t end there.
They underline the importance of strong managerial
skills and experience in M&A, business deals
and megatransactions. And, they note, saving the
company money—and making it—are equally, if not
more, important.

“To be a good CFO, you
must understand what keeps people in operations up
all night,” says CPA Peggy Scott, CFO of New
Orleans-based Pan American Life Insurance Co. “You
will have to win over the sales and operations
sides and show them you can help them. If you
aspire to become a CEO someday, you must keep in
mind that you’ll need some level of experience
along the way. Operations experience helps
candidates take that final step.”

She
suggests that not being able to see the big
picture is “the single biggest thing” that holds
CFO candidates back. “I’ve seen really good people
get overlooked because they were put in a box,”
she explains. For example, Scott says that heading
up the internal audit and tax departments can be
dead-end jobs because they are perceived as being
too narrowly focused.

What about having
definite career goals in your own five-year plan?
“I think goals are essential to my success as well
as for others,” says Scott. “I have always had
short and long-term goals, both personal and
professional in nature for as long as I can
remember. In fact, most of the time, I carry them
with me. Overall I would say I have achieved many
of my professional goals, but I still have some
years ahead and some additional items I would like
to accomplish. However, the important part is to
plan as far as you can see and then adjust as you
go.”

Scott began her career in public
accounting, rising through the ranks as a tax
partner at Deloitte Haskins & Sells to become
a managing partner. In order to achieve her
objective of managing a Deloitte office, Scott had
not only worked on her technical skills but had
also spent significant time in developing the
practice, mentoring staff, and getting involved in
community organizations.

Once she left
Deloitte, Scott chose to further develop her
managerial abilities by enrolling in an executive
MBA program at Tulane University. She then became
CFO of both a health care company and an HMO
before landing her present position at
Pan-American Life Insurance. As a CFO all her CPA
skills come into play, whether looking for
opportunities to improve the company’s bottom line
and add profits through financial planning, or
restructuring and redesigning departments for
efficiency and cost savings.

Although not
every company looks within to fill the CFO job,
“the key to becoming CFO through promotion is
board exposure. Get on teams, do something to get
the board’s attention. The board needs to know and
approve you in order for you to become CFO.” And,
she says, “It doesn’t hurt to let the CEO know you
aspire to the CFO position some day. Don’t assume
that he or she realizes it.”

If you’re
looking outside your current industry for a CFO
position, Scott observes, you’ve got lots of
company. “The trend is to be more receptive to
CFOs from other industries,” she says. But, she
cautions, “every time you make a career change or
an industry change, you have to work very hard.
You have to take time to learn, and most of that
time is on your own.”

Finally, Scott
notes, anyone who wants to become a CFO must
possess impeccable integrity. “The CEO must view
you as totally loyal to him or her, and as being
there to assist in leading the company. If you’ve
spoiled your reputation along the way, there’s no
getting it back.”

The results of the 2016 presidential election are likely to have a big impact on federal tax policy in the coming years. Eddie Adkins, CPA, a partner in the Washington National Tax Office at Grant Thornton, discusses what parts of the ACA might survive the repeal of most of the law.